Bharti Infratel Extends Deadline for Indus Tower Merger

Sunil Mittal-led telecom infrastructure company Bharti Infratel has extended the deadline for a merger with mobile tower company Indus Towers by two more months to February 24, as it has not received the necessary government approvals so far.

The Board of Directors decided to extend the long-stop date till February 24, 2020, subject to agreement on closing adjustments and other conditions precedent for closing, with each party retaining the right to terminate and withdraw the scheme.

The company cautioned that there can be no assurance that the merger can be completed within the extended time-frame and added that the completion of the merger is contingent upon receipt of requisite regulatory approvals and fulfillment of other conditions precedent.

Bharti Infratel informed that the requisite government approvals have not been received till date, and consequently, conditions precedent could not be completed within the extended timeline i.e. December 24, 2019.

As of September 30, 2019, Bharti Infratel and Vodafone India hold 42% stake each in Indus.

Vodafone Idea holds an 11.15% stake in the mobile tower firm.

The merger of Indus Towers and Bharti Infratel announced in April last year aimed at creating the largest mobile tower operator in the world outside China with over 163,000 towers across 22 telecom service areas.

As per the plans, the combined company, which would fully own the respective businesses of Bharti Infratel and Indus Towers, would change its name to Indus Towers and will continue to be listed on Indian Stock Exchanges.

The merger is crucial as it will help loss-making telecom companies Bharti Airtel and Vodafone Idea sell a stake to raise funds in the competitive telecom battleground, especially at a time when they have to pay huge dues to the department of telecommunications after an unfavorable court verdict in October.

Bharti Airtel has set aside Rs 34,260 crore and Vodafone Idea has made provisions for Rs 25,677.9 crore in the September quarter after the Supreme Court upheld the government’s definition of revenue based on which telecom companies pay levies.

Net net we believe that this proposed merger with Bharti Infratel of Indus towers will help in reducing the debt burden for Vodafone specifically which is suppressed by a huge mountain of debt as on date

Hence this deal when finally gets done will be positive in the long term for Vodafone’s capital allocation going ahead.

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